How will the Israel and Palestinian tension affect the economy.

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As far the current conflict will go, I do not see much of a rally in gold and silver. This tension is not big enough to concern the whole market. However if more parties like Iran and other middle east countries join forces and strongly oppose to the conflict, that’s a different story. Iran would benefit most from the current conflict as the tension would increase oil prices which we have already witness on the Brent oil. Israel cannot risk an attack on Iran as Iran is backed back by Russia and China and both countries are a formidable force against the US and Nato alliance.

Undoubtedly, the price of Gold and Silver will go up in the event of a tension escalating to other countries. The first sign would always be an increase to the oil prices.  The rise in oil price will further depress the economy and this will have only 2 endings:

a)      A truce called

b)      War

Like it or not, war is good business. If you study history, depressed economies were brought back to live via war. U.S will have to fund the war via printing more money and that will lead to the weakening the dollar.

However I doubt that this tension will lead to anything as the U.S is handling more important stuff in its own backyard pertaining to the fiscal cliff which is due to take effect in about 40 days.